The negative interest rate outlook is still effecting negatively on the British pound pushing it lower across the broad even in the times of the greenback weakness the pound suffers versus the European currencies and comes lagged behind them specially the Swiss frank which was underpinned recently by the geopolitical concerns in the middle east and the tension between Pakistan and India.

The market is still waiting and ready for further bad news resulted from the credit crises and the negative growth outlook currently which supporting the reserving and waiting for a new change of this current market sentiment which can support the gold and the Swiss frank in the coming days. This stance put increased pressure on the GBPCHF which can continue lower than 1.5.

Also the gold tried today again to come over 900$ versus the greenback in spite of the negating inflation outlook because of the recession but the tension in the middle east pushed the oil prices higher again supporting the gold from another side. the gold also can find support from this current market sentiment which can continue with no sign of bottoming out of this recession.

So, it is important to wait later this week for the release of US ISM manufacturing and non-manufacturing indexes of December and the PMI manufacturing and service data of EU and UK as new clue of the pace of this recession.

Best wishes

FX Consultant
Walid Salah El Din

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